Possible Reserves

Possible reserves are those unproved reserves which analysis of geological and
engineering data suggests are less likely to be recoverable than probable reserves. In this
context, when probabilistic methods are used, there should be at least a 10% probability
that the quantities actually recovered will equal or exceed the sum of estimated proved
plus probable plus possible reserves.
In general, possible reserves may include (1) reserves which, based on geological
interpretations, could possibly exist beyond areas classified as probable, (2) reserves in
formations that appear to be petroleum bearing based on log and core analysis but may
not be productive at commercial rates, (3) incremental reserves attributed to infill drilling
that are subject to technical uncertainty, (4) reserves attributed to improved recovery
methods when (a) a project or pilot is planned but not in operation and (b) rock, fluid, and
reservoir characteristics are such that a reasonable doubt exists that the project will be
commercial, and (5) reserves in an area of the formation that appears to be separated from
the proved area by faulting and geological interpretation indicates the subject area is
structurally lower than the proved area.